Howard Gartman is a 40% partner in the Horton & Gartman Partnership. During 2015, the partnership reported the total items below (100%) on its Form 1065:
Ordinary income …………………………………….. $180,000
Qualified dividends …………………………………. 10,000
Long-term capital loss ………………………………. (12,000)
Long-term capital gain ……………………………… 28,000
Charitable contributions…………………………….. 4,000
Cash distributions to partners ………………………. 150,000
Howard and his wife Dawn, who file a joint return, also had the following income and deductions from sources not connected with the partnership:
Income
Dawn’s salary ………………………………… $40,000
Qualified dividends ………………………….. 3,000
Deductions
Mortgage interest …………………………….. 9,000
Real estate taxes ……………………………... 3,800
Charitable contributions ……………………… 1,000
Howard and Dawn have two dependent children. During 2015, Dawn had $6,000 in federal income taxes withheld from her salary and Howard made four estimated tax payments of $3,000 each ($12,000 total). Compute Howard and Dawn’s Federal income tax liability for 2015 and whether they have a balance due or a tax refund. Ignore the child tax credits and the election to take state sales tax as an itemized deduction.